Scotia Update Outperform $5OUR TAKE: ECN hosted a business update call that focused on its 2018 forecast along with corporate developments.
Key points for investors were: 1) the company is no longer expecting to complete an additional acquisition by year-end, but it does expect to complete two deals in the first half of 2018; 2) Core Op. EPS guidance of $0.19, and 3) new businesses are trending well with upside potential not incorporated into the forecast. Given that during its transition phase ECN is viewed as a more event-driven story, the news of the shift in acquisition timing is likely to come as a bit of a disappointment and dampen near-term enthusiasm.
Given our sense of ECN's acquisition appetite and confidence in its ability to execute on attractive deals, we would be buyers on any material weakness as catalysts likely lie ahead in the first part of 2018.
While we have made some modest upward revisions to our projections for the recently acquired Service Finance, we have brought our 2018 and 2019 numbers down, largely reflecting assumptions regarding legacy businesses such Rail and Aviation.
We maintain our Sector Outperform rating and $5.00 target